Cost cutting and its effects on employees' perception of job performance at Li & Fung Philippines

• Main Authors: Besa, Maria Beatriz B., Biacora, Dominic Josef A., Calalo, Christian Jan L., David, Ezekiel D.
• Format: text
• Language: English
• Published: Animo Repository 2010
• Subjects: Cost control; Industrial management; Psychology, Industrial; Organizational effectiveness
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/14507
• Institution: De La Salle University

With the recent global financial crisis of 2008, companies local and foreign have struggled to keep themselves afloat at a time of financial difficulty. Despite the downturn, companies have become more competitive than ever, using different techniques and strategies to survive and maintain their position. Cost cutting is the number one option that companies undertake to address the issue. However, cost cutting measures implemented by the company are clearly unwelcomed by employees. Li & Fung Philippines, being a part of global supply chain suffered greatly due to declines in sales here and abroad, implemented cost cutting measures to cut back on their costs. This study focused on how the cost cutting measures implemented by Lin & Fung Philippines have affected the employees' perception of their job performance. Using several Chi square Test of Independence on the data gathered from the employees of the company, the researchers were able to find an interesting result. Although several studies found that job performance of employees declined after cost cutting measures were implemented, results from the tests do not match the said claims. The cost cutting measures that the employees said had the biggest impact on them - No salary increase , decrease in allowances , and Lay-offs , had no significant effect on the employees' perception of their job performance. Cost cutting measures implemented had no significant effect on the five aspects of job performance used in this study namely: productivity, job knowledge, teamwork, organizational commitment, and customer service. The researchers attribute this result to the proper communication between the management and the employees. Furthermore, the employees' proper attitude towards the temporary situation should also be considered. Whenever companies plan to cut costs, using the strategies mentioned in this study, the researchers feel that proper communication is the key to minimize the negative effects if there is any. Moreover, cutting costs related to employees' salaries and compensation should be the last option of the company. They can cut back on other expenditures aside from the employees' pay and incentives. For future research on this topic, the researchers recommend to use bigger sample size from several companies currently implementing cost cutting. They can also measure job performance from the point of view of the employers so they can have a more accurate measure of the variable.